Higher-income student debt holders skip homeownership

Student debt holders with higher incomes are more likely to delay homeownership when compared to lower-income individuals with the same debt levels, a new study from personal finance site, NerdWallet and Vassar College Professor Benjamin Ho concludes.

For a while, the housing market has anticipated a return of higher-income young graduates, hoping they would boost home sales. But a survey of student loan debt suggests the market may be waiting for a while. The report elaborates:

You might expect that having student debt makes buying a home difficult because of the debt burden. Similarly, you’d expect to see higher levels of consumer debt or lower income levels to have the same impact. Yet in our survey, we found that total debt burdens as measured by credit card debt had no impact on how much the student loans impacted subsequent plans for home ownership, and higher income respondents were more likely to delay home ownership than lower income people with the same levels of student debt. Further analysis shows that this is because higher income people scored higher on our financial literacy tests. This heightened “debt-consciousness” is also seen amongst respondents whose parents owned their houses rather than rented, suggesting that financial literacy begins early.

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